Texas 2017 - 85th Regular

Texas House Bill HB3803 Compare Versions

Version 1 (Old)

Version 2 (New)

Old	New		Differences
1		-	H.B. No. 3803
	1	+	By: Faircloth (Senate Sponsor - Zaffirini) H.B. No. 3803
	2	+	(In the Senate - Received from the House May 3, 2017;
	3	+	May 5, 2017, read first time and referred to Committee on Business &
	4	+	Commerce; May 15, 2017, reported favorably by the following vote:
	5	+	Yeas 9, Nays 0; May 15, 2017, sent to printer.)
	6	+	Click here to see the committee vote
2	7
3	8
	9	+	A BILL TO BE ENTITLED
4	10		AN ACT
5	11		relating to certain authorized investments for domestic life,
6	12		health, and accident insurers.
7	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
8	14		SECTION 1. Section 425.118, Insurance Code, is amended by
9	15		amending Subsections (c), (d), and (e) and adding Subsections (d-1)
10	16		and (e-1) to read as follows:
11	17		(c) The term of an obligation secured by a first lien on a
12	18		leasehold estate in real property may not, as of the date the
13	19		obligation is acquired, exceed a period equal to four-fifths of the
14	20		unexpired term of the leasehold estate, including any renewal
15	21		options exercisable by the lessee, and the obligation must fully
16	22		amortize during that period. The term of the leasehold estate,
17	23		including any renewal options exercisable by the lessee, may not
18	24		expire sooner than the 10th anniversary of the expiration date of
19	25		the term of the obligation.
20	26		(d) An obligation secured by a first lien on a leasehold
21	27		estate in real property must be payable in one or more installments
22	28		of an amount or amounts sufficient to ensure that, at any time
23	29		during [after the expiration of two-thirds of] the original term of
24	30		the obligation, the principal balance on the obligation is not
25	31		greater than the principal balance would have been if the
26	32		obligation had been amortized over the original term of the
27	33		obligation in equal monthly, quarterly, semiannual, or annual
28	34		payments of principal and interest with payments of interest only
29	35		for the first five years of the original term of the obligation.
30	36		(d-1) Subsection (d) does not apply to an obligation secured
31	37		by a first lien on a leasehold estate in real property if:
32	38		(1) the amount of the obligation does not, as of the
33	39		date the obligation is acquired, exceed 75 percent of the value of
34	40		the leasehold estate;
35	41		(2) the lease agreement provides that the fee simple
36	42		estate in the real property transfers automatically to the lessee
37	43		on or before the expiration of the term of the leasehold estate,
38	44		including any renewal options exercisable by the lessee; or
39	45		(3) the lease agreement provides that the lessee has
40	46		an option to purchase the fee simple estate in the real property on
41	47		or before the expiration of the term of the leasehold estate,
42	48		including any renewal options exercisable by the lessee, for an
43	49		amount that is less than 10 percent of the appraised value of the
44	50		real property, and the insurance company has a contractual right if
45	51		the lessee does not exercise that option to acquire the fee simple
46	52		estate in the real property for that same amount, by assignment from
47	53		the lessee or otherwise.
48	54		(e) Except as provided by Subsection (e-1), if [If] any part
49	55		of the value of buildings is to be included in the value of real
50	56		property or a leasehold estate in real property to secure an
51	57		obligation under this section:
52	58		(1) the buildings must be covered by adequate property
53	59		insurance, including fire and extended coverage insurance, issued
54	60		by:
55	61		(A) an insurer authorized to engage in business
56	62		in this state; or
57	63		(B) an insurer recognized as acceptable to issue
58	64		that coverage by the insurance regulatory official of the state in
59	65		which the real property is located;
60	66		(2) the amount of insurance provided by one or more
61	67		policies may not be less than the lesser of:
62	68		(A) the unpaid balance of the obligation; or
63	69		(B) the insurable value of the buildings; and
64	70		(3) the loss clause under each policy must be payable
65	71		to the insurance company as the company's interest may appear.
66	72		(e-1) The property insurance otherwise required under
67	73		Subsection (e) is not required if the borrower maintains a net worth
68	74		as indicated in the borrower's audited financial statements for the
69	75		most recent fiscal year of at least the greater of five times the
70	76		amount of the indebtedness or $100 million and:
71	77		(1) the insurance company has recourse against the
72	78		borrower or the borrower's guarantor; or
73	79		(2) for an obligation secured by a leasehold estate:
74	80		(A) the tenant assigned the lease to the
75	81		insurance company; and
76	82		(B) the lease agreement is in writing and
77	83		provides that if a building on the property is damaged or destroyed,
78	84		the tenant or the tenant's guarantor is obligated to rebuild or
79	85		restore the damaged or destroyed building to the building's
80	86		condition immediately before the damage or destruction occurred or
81	87		compensate the owner for the loss arising from the damage or
82	88		destruction.
83	89		SECTION 2. Section 425.118, Insurance Code, as amended by
84	90		this Act, applies only to an investment made on or after the
85	91		effective date of this Act. An investment made before the effective
86	92		date of this Act is governed by the law as it existed immediately
87	93		before that date, and that law is continued in effect for that
88	94		purpose.
89	95		SECTION 3. This Act takes effect September 1, 2017.
90		-	______________________________ ______________________________
91		-	President of the Senate Speaker of the House
92		-	I certify that H.B. No. 3803 was passed by the House on May 2,
93		-	2017, by the following vote: Yeas 145, Nays 0, 1 present, not
94		-	voting.
95		-	______________________________
96		-	Chief Clerk of the House
97		-	I certify that H.B. No. 3803 was passed by the Senate on May
98		-	19, 2017, by the following vote: Yeas 31, Nays 0.
99		-	______________________________
100		-	Secretary of the Senate
101		-	APPROVED: _____________________
102		-	Date
103		-	_____________________
104		-	Governor
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